Vagina surgery rebate may get the knife

THE government is expected to target one of the more delicate areas of medical care - cosmetic genital surgery - in its search for cuts to the cost of Medicare.

The increase in so-called ''designer vagina'' surgical procedures is expected to come under tougher scrutiny in relation to eligibility for Medicare benefits in Tuesday's budget.

The procedure is one of several operations that can be performed outside hospital and thus attract the benefit of the Medicare safety net which considerably reduces the out-of-pocket cost of expensive surgery.

Vulvoplasty or labioplasty, sought by patients to improve the shape and size of the vagina, and to treat painful or embarrassing conditions, can be eligible for Medicare payments if deemed to be clinically necessary, but not if performed purely for cosmetic reasons. The operation can cost about $4500.

However the number of these procedures done outside hospital attracting payments under the Medicare safety net has nearly doubled in recent years to 191 in 2010, at a cost of $427,551.

The cost is small in terms of the $17 billion Medicare budget but the focus of the cost-cutting in the budget is expected to fall on numerous small areas of health expenditure.

The pressure to find the money has raised the hopes of public health advocates that the government will take the budget scalpel to long-protected duty-free cigarette sales. The move would generate an estimated $200 million in revenue presently forgone.

The Heart Foundation and National Stroke Foundation are calling for the government to abolish duty-free cigarette sales, arguing the revenue could pay for cardiovascular health initiatives.

The revenue could cover the $160 million cost of crucial proposals vital to tackle heart disease and strokes such as checks to detect the risk of disease and campaigns for healthy lifestyles.

There are also worries the government may hit the $1 billion pharmaceutical research and development sector, by withdrawing tax incentives.